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1 Page 214* in the land, because it would be considered absolutely essential for the main- _ tenanoe of the water supply. The very Slight amount assigned and repre­sented by the land would be almost Page 215 inconsequential as to the importance acquired to any decrease or impairment in he company's right to pjoduce water, because that would be paramount. Chatman Allen: On the water rights, the item that you set up as the cost of water rights there, did you figure the fact that to obtain a water right you must make application to the State Engineer*s office? Wehei fee. for underground water as well as surface water? .‘she: I knew that was the requirement. Allen: Did you take that into consideration, or not? Wehet Yes. It la my understanding from a review of the records that such authorisation has been granted by the State Engineer. (Lawyer says to see Exhibit D) Chairman Allan: Then 1 don’t know whether this witness , can tell me about this or not, but why was the 120 acres ( three forties) in that long strip ^ included in the shaded area on Exhibit S (map of production lands), if you know? Wahe: Well, I think 1 can tell you, but 1 will submit that ay information is, you might say, hearsay to opposed to having basic knowledge. It was acquired, Mr. Co atissioner, in order to assure the company that wells sight aot be drilled in that area by private individuals, for example, and so take water that was available and is now available, from the water company. It is ay understanding that the geologists is their study of this underground water, artesian water supply, are pretty certain as to the direction of flow of this underground water, and it starts in flowing down this way, so if wells wers drilled ahead of there, it would have the advantage of tapping the water supply ahead of the water company, thus bleeding and lessening the water supply avail­able to the water company, so that 120 acres was acquired at a later date for that express purpose. Chairman Allen: Well, wouldn’t they be protected under the priority of right of water? Wehet Well, I am net sufficiently familiar with the law. Chairman Allen: You dont know? Mehe: The laws of Nevada concerning the rights is tinder ground water supplies,- I am not too familiar with. Page 216. Chairman Alien: All right. You nay proceed. Page 223. Cannon: to Hr. Wehe. The Gosmissioner say have cleared this up, but you say the 120 acres of land in the MW section as Indicated in the shaded area on Exhibit M (map of production lands) is necessary to protect the water company, in your opinion? iehe: Yea, and that was also the view, of the management in the purchasing Of that land. Cannon: You realize, do you not, that the water company could not secure permits for appropriation from the State Engineer* s office for the amount of water particularly in question here unless they were devoted to a public purpose, do you new? Wehe: Yes. Carmen: And that the State Engineer's Office would consider the public purpose being served in considering applications for other wells that sight endanger this source in any maimer? Wehe: (Line 24) Undoubtedly the engineer would, but however, additional wells are being drilled, as has been testified to in the "adequacy case" hearing last fall, to the extent that water was removed by others. It may well bs that there would be that such less water to meet the public requirement. Cannon: You stated that the assessed value of the land in question was approximately 3§ times of that of the book v&lye and Indicated that the Commis­sion should give some consideration to that fact. In your opinion, should the Commission base rates on the present day value in event of a depression in which the value of the investment was only \ of tha original cost? Wehe: You are referring to the land? Caiman: Yes. Wehe: In sy opinion, if a present day cost figure is used in one period in testing rates, it should like-wise be used in any other period, including a period of depression. Cannon: In other words, you fed that the increased value of the land